Tuesday, December 15, 2015

CPI Climbs 2% Year-to-Year

The Federal Reserve's absurd price inflation target of 2% has been hit.

The Labor Department said this morning that core Consumer Price Index, which excludes food and energy, increased 0.2 percent last month. It was the third straight month that the core CPI increased by that margin.

In the 12 months through November, the core CPI rose 2.0 percent, the largest gain since May 2014, after rising 1.9 percent in October.

Almost no one is ready for the price inflation that is ahead. Especially not the Fed, they will raise rates but nowhere quick enough to slow the inflation.



  1. I'd love to know how they come up with this figure. The price of things seems to be dropping. I drive 26 miles one way to work every day, and I can say from experience that I've had extra money in my budget to play with due to the low price of gasoline over the past several months. I bought a big ham at the grocery store the other day for $0.77 per pound. I know people like to complain about rising prices, but I just haven't seen it lately. If you go out to eat a lot, then you might see it more due to the rising minimum wage.

    1. Really? Food prices have been increasing pretty rapidly, at least in NYC. My weekly grocery budget went from ~$110 to ~$140 in the past 18 months. For example, I used to get 36 eggs at Costco for ~$7, now I get 24. I've watched 1lb of hangar steak go from ~$10 to ~$13 over the past year, 18 months. My dog's food has gone from ~$8 to $10. Paper towels have gone from ~$14 for a large pack to over $17. There's tons more examples. Obviously energy costs are down now (which is a supply side phenomenon) and that masks other price increases, but food (and I didn't even mention rent) prices have gone up considerably.

    2. Uh-oh, Janet. Neil is experiencing a personal increase in how far his money goes! Better get those printing presses going to solve that "problem".

  2. Alright, goal accomplished, now raise those rates!

  3. I don't share that estimate for the near term, only the long term.

    For the near term, I think it more likely economic contraction will emerge and outpace money supply inflation to result in net price deflation for most goods in the next 1-3 years. Only essentials like food and electricity will experience the magnitude of price inflation RW alludes to.

    Hard to say though, entirely depends on how soon and how quickly the economy tanks.